EXHIBIT 10.4
LIMITED WAIVER AND AMENDMENT NO. 11
TO
2001 AMENDED AND RESTATED NOTE PURCHASE AGREEMENT
This Limited Waiver and Amendment No. 11 (the "Waiver and Amendment"),
dated as of April 30, 2004, is by and among THC SYSTEMS, INC., a New York
corporation (the "Company"), ONEIDA LTD., a New York corporation (the
"Guarantor"), ALLSTATE INSURANCE COMPANY ("Allstate"), ALLSTATE LIFE INSURANCE
COMPANY ("Allstate Life") and PACIFIC LIFE INSURANCE COMPANY (together with
Allstate and Allstate Life, the "Purchasers").
R E C I T A L S
A. Company, Guarantor and Purchasers are parties to the 2001 Amended and
Restated Note Purchase Agreement dated as of May 1, 2001 pertaining to
those certain notes with a maturity date of May 31, 2005, as amended by a
Waiver and Amendment No. 1 to 2001 Amended and Restated Note Agreement
dated as of December 7, 2001, an Amendment No. 2 to 2001 Amended and
Restated Note Agreement dated as of April 23, 2002, an Amendment No. 3 to
2001 Amended and Restated Note Agreement dated as of April 24, 2003, a
Limited Waiver and Amendment No. 4 to 2001 Amended and Restated Note
Purchase Agreement dated as of October 31, 2003, a Limited Waiver and
Amendment No. 5 to 2001 Amended and Restated Note Purchase Agreement dated
as of December 12, 2003, a Limited Waiver and Amendment No. 6 to 2001
Amended and Restated Note Purchase Agreement dated as of January 30, 2004,
a Limited Waiver and Amendment No. 7 to 2001 Amended and Restated Note
Purchase Agreement dated as of March 1, 2004, a Limited Waiver and
Amendment No. 8 to 2001 Amended and Restated Note Purchase Agreement dated
as of March 15, 2004, a Limited Waiver and Amendment No. 9 to 2001 Amended
and Restated Note Purchase Agreement dated as of March 31, 2004 and a
Limited Waiver and Amendment No. 10 to 2001 Amended and Restated Note
Purchase Agreement dated as of April 15, 2004 (as so amended or otherwise
modified, the "Note Agreement").
B. The Company and the Guarantor have requested that the Purchasers (a) waive
payment of the mandatory principal payment due to the Purchasers on
November 1, 2003 in the amount of $3,890,000 pursuant to Section 2.1(a) of
the Note Agreement (the "Sinking Fund Payment") until June 15, 2004, (b)
waive the Defaults and Events of Default arising out of the Company's and
the Guarantor's failure to comply with Sections 7.12(a), (b), (c) and (d)
of the Note Agreement for the Fiscal Quarters ended October 25, 2003 and
January 31, 2004, (c) waive the expected defaults and Events of Default
arising out of the Company's and the Guarantor's failure to comply with
Sections 7.12(a), (b), (c) and (d) of the Note Agreement for the Fiscal
Quarter ended May 1, 2004, (d) waive the Company's and the Guarantor's
anticipated failure to deliver the Fiscal Year end financial statements for
the Fiscal Year ended in 2004 with an unqualified report from the Company's
and the Guarantor's independent public accountant as required pursuant to
Section 6.1(b) of the Note Agreement and (e) make certain amendments to the
Note Agreement.
C. The Guarantor has notified the Purchasers that it may receive a request
from HSBC Bank USA ("HSBC") for reimbursement for draws made under that
certain Irrevocable Documentary Standby Letter of Credit Xx. XXXXXX000000
dated June 21, 1999 (as amended) in a face amount equal to $2,090,000 (the
"HSBC Reimbursement Obligation"). In the event of such reimbursement
request from HSBC, the Guarantor has not yet determined its position with
respect to payment of such obligation. Accordingly, the Guarantor has
requested that the Purchasers waive any Default and Event of Default
pursuant to section 8.01(c) of the Note Agreement arising out of the
Guarantor's failure to pay such HSBC Reimbursement Obligation.
D. Each of the Purchasers are willing to grant the waivers requested by the
Company and the Guarantor subject to and upon the terms and conditions set
forth herein.
NOW, THEREFORE, the parties agree as follows:
1. Definitions. All capitalized terms used in this Waiver and Amendment
which are not otherwise defined shall have the meanings given to those terms in
the Note Agreement.
2. Waiver. The Purchasers hereby waive, for the period commencing on the
Effective Date (as defined below) of this Waiver and Amendment and ending on
June 15, 2004 (the "Waiver Period"), (a) payment of the Sinking Fund Payment,
(b) the Defaults and Events of Default arising out of the Company's and the
Guarantor's failure to comply with Sections 7.12(a), (b), (c) and (d) of the
Note Agreement for the Fiscal Quarters ended October 25, 2003 and January 31,
2004, (c) the expected Defaults and Events of Default arising out of the
Company's and the Guarantor's anticipated failure to comply with Sections
7.12(a), (b), (c) and (d) of the Note Agreement for the Fiscal Quarter ended May
1, 2004 (d) the expected Default and Event of Default created as a result of the
Company's and the Guarantor's anticipated failure to deliver the Fiscal Year end
financial statements for the Fiscal Year ended in 2004 with an unqualified
report from the Company's and the Guarantor's independent public accountant as
required pursuant to Section 6.1(b) of the Note Agreement and (e) any Default
and Event of Default pursuant to Section 8.01(c) of the Note Agreement arising
out of the Guarantor's failure to pay the HSBC Reimbursement Obligation,
provided that upon the expiration of the Waiver Period, the waiver provided for
herein shall be immediately (without cure period or notice) and automatically
terminated in its entirety and be of no force and effect as if the waiver had
never been granted; provided further that (x) in the event that any other
creditor, or group of creditors, of the Guarantor or any of its Subsidiaries
with claims aggregating in excess of $1,000,000, (A) accelerates the obligations
of the Guarantor or such Subsidiary to such creditor or group of creditors, (B)
commences enforcement of their rights and remedies in respect of the obligations
of the Guarantor or such Subsidiary to such creditor or group or creditors, or
(C) takes any other action against the Guarantor or any such Subsidiary to
improve their position as creditors of the Guarantor or such Subsidiary (it
being understood that none of a meeting among lenders to discuss options and
alternatives, the mere sending of a notice of default or reservation of rights
or the charging of a customary work fee shall constitute such an action) or (y)
the Guarantor or any of its Subsidiaries makes any payments in respect of the
$2,000,000 Promissory Note issued by the Guarantor dated September 20, 2003,
voluntarily reduces the Commitment under the Credit Agreement or makes any
payment in respect of the HSBC Reimbursement Obligation, the waiver provided for
herein shall be immediately (without cure period or notice) and automatically
terminated in its entirety and be of no force and effect as if the waiver had
never been granted. This waiver is limited to the (1) payment of the Sinking
Fund Payment, (2) Defaults and Events of Default arising out of the Company's
and the Guarantor's failure to comply with Sections 7.12(a), (b), (c) and (d) of
the Note Agreement for the Fiscal Quarters ended October 25, 2003 and January
31, 2004, (3) the anticipated failure to comply with Sections 7.12(a), (b), (c)
and (d) of the Note Agreement for the Fiscal Quarter ended May 1, 2004, (4) the
anticipated failure to deliver the financial statements for the Fiscal Year
ended in 2004 with an unqualified report from the Company's and the Guarantor's
independent public accountant as required pursuant to Section 6.1(b) of the Note
Agreement and (5) the failure to comply with Section 8.01(c) of the Note
Agreement as a result of any failure to pay the HSBC Reimbursement Obligation,
and shall not constitute or be construed as a waiver of any other presently
existing or future Defaults or Events of Default.
3. Amendment to Section 3.1(e) of the Note Agreement. Section 3.1(e) is
amended in its entirety to read as follows:
"(e) No Contingent Liabilities or Adverse Changes.
Neither the Guarantor nor any of its Subsidiaries
has any contingent liabilities which are material
to the Guarantor and its Subsidiaries taken as a
whole other than (i) as indicated on the financial
statements described in the foregoing paragraph
(d) of this Section 3.1 and (ii) that may arise or
may have arisen in connection with charges related
to FAS 87. For any representations and warranties
made on or after the Amendment No. 11 Effective
Date, since January 27, 2001, there has been no
material adverse change in the business, assets,
operations, prospects or condition, financial or
otherwise, of the Guarantor and its Subsidiaries,
taken as a whole, and no sale, transfer or other
disposition of a material part of the assets or
business of the Guarantor or any Subsidiary,
except for any material adverse change that has
been publicly disclosed or otherwise disclosed in
writing to the Purchasers on or before the
Amendment No. 11 Effective Date."
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4. Amendment to Section 5.1 of the Note Agreement. Section 5.1 of the Note
Agreement is hereby amended by inserting the following new defined term in the
appropriate alphabetical order:
""Amendment No. 11 Effective Date" means the date on
which all the conditions to the Limited Waiver and
Amendment No. 11, dated April 30, 2004, have been
satisfied."
5. Amendment to Section 7.4 of the Note Agreement. Section 7.4 of the Note
Agreement is hereby amended by replacing the last sentence thereof with the
following language:
"Except as otherwise permitted under the terms and
conditions of the Collateral Agency Agreement, the
Guarantor and its Subsidiaries may sell, transfer,
or otherwise dispose of (in one transaction or a
series of transactions) or engage in a
sale/leaseback transaction with respect to, (i)
assets if the consideration received is in cash or
cash equivalents at least equal to the fair market
value of such assets and the aggregate
consideration received does not exceed $11,000,000
for all such sales, transfers or dispositions
after the Amendment No. 2 Effective Date; provided
that 100% of the proceeds received from any such
sale, transfer or disposition permitted above
(after deducting the reasonable expenses of such
sale, transfer or disposition) are applied to
prepay, on a pro rata basis, the Loans outstanding
under the Credit Agreement and the Indebtedness
outstanding under this Agreement and in addition
(ii) the manufacturing and/or distribution centers
and other miscellaneous assets and machinery
located in Mexico, Canada, Italy and China for an
amount not to exceed $10,000,000 in the aggregate
for all such sales, transfers or dispositions
after the Amendment No. 9 Effective Date."
6. Representation and Warranties. Each of the Guarantor and the Company
represents and warrants to the Purchasers that the following statements are
true, correct and complete:
(a) Representations and Warranties. Each of the representations and
warranties made by the Guarantor and the Company in the Note Agreement is true
and correct on and as of the date of this Waiver and Amendment.
(b) No Default or Event of Default. After giving effect to this Waiver
and Amendment, no Default or Event of Default has occurred and is continuing.
(c) Execution, Delivery and Enforceability. This Waiver and Amendment
has been duly and validly executed and delivered by each of the Guarantor, the
Company and each Subsidiary Guarantor and constitutes each such Person's legal,
valid and binding obligation, enforceable against such Person in accordance with
its terms.
7. Covenants. In order to induce the Purchasers to enter into this Waiver
and Amendment, each of the Guarantor and the Company hereby agrees to the
following covenants, the failure to perform which will be an additional Event of
Default under the Note Agreement:
(a) Financial Forecast. Each of the Guarantor and the Company shall
continue to work with the Purchasers and Xxxxxxx & Marsal regarding the
financial forecast delivered pursuant to paragraph 6(c) of the Limited Waiver
and Amendment No. 4 dated as of October 31, 2003 (including updating such
financial forecast and creating a plan regarding the implementation of such
forecast).
(b) Strategic Plans. Each of the Guarantor and the Company shall
continue to work with the Xxxxx X. Xxxxxxx Company ("PJS") with respect to the
strategic plans of the Guarantor and the Company and, on or prior to May 10,
2004, the Guarantor and the Company shall deliver to the Purchasers a strategic
plan summary, in form and substance reasonably satisfactory to the Purchasers,
prepared by PJS.
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(c) CRO Reports. Xxxx Xxxxx Consulting Group LLC shall (i) continue to
serve in the capacity of Chief Restructuring Officer, (ii) on or prior to May
17, 2004, deliver to the Purchasers a report regarding the Guarantor's and the
Company's cost reduction opportunities, working capital management, a review of
the current business plan and a review of the Guarantor's and the Company's
current fiscal year financial forecasts and (iii) participate in meetings with
the Purchasers as may be reasonably requested by the Purchasers.
(d) Lender Waiver Termination Notice. The Guarantor shall, upon
receiving notification from the Lenders that they intend to terminate the waiver
referred to in Section 8(e) of this Waiver and Amendment, immediately notify
Xxxxxxx XxXxxxxxx LLP ("Xxxxxxx") and the Purchasers thereof.
8. Conditions to Effectiveness of Waiver and Amendment. This Waiver and
Amendment shall be effective on the date (the "Effective Date") when and if each
of the following conditions is satisfied:
(a) Consent of Subsidiary Guarantors. Each of the Subsidiary
Guarantors shall have executed and delivered to Xxxxxxx the Consent of
Subsidiary Guarantors attached to this Waiver and Amendment.
(b) No Default or Event of Default; Accuracy of Representations and
Warranties. The Guarantor and the Company shall deliver to each of the
Purchasers a certificate of a Financial Officer certifying that, after giving
effect to this Waiver and Amendment, no Default or Event of Default shall exist
and each of the representations and warranties made by the Guarantor or any of
its Subsidiaries herein and in or pursuant to the Transaction Documents shall be
true and correct in all material respects as if made on and as of the date on
which this Waiver and Amendment becomes effective
(c) Expense Reimbursements. The Guarantor shall have paid all
reasonable invoices presented to the Guarantor for expense reimbursements
(including reasonable attorneys' and financial advisors' fees and disbursements)
due to the Purchasers in accordance with Section 11.1 of the Note Agreement.
(d) Execution by Purchasers. Xxxxxxx shall have received a counterpart
of this Waiver and Amendment duly executed and delivered by the Guarantor, the
Company, and each Purchaser.
(e) Waiver and Amendment Pursuant to Credit Agreement. Xxxxxxx shall
have received a copy of an executed waiver of any Default or Event of Default
arising under the Credit Agreement, duly executed by the Guarantor, the
Administrative Agent and the Lenders, (i) deferring the scheduled reduction in
the Lenders' Revolving Commitments (as defined in the Credit Agreement) to no
earlier than June 15, 2004, (ii) waiving until June 15, 2004 any Default or
Event of Default arising from the failure to satisfy any financial covenants
under Section 6.11 of the Credit Agreement, (iii) waiving under June 15, 2004
any Default or Event of Default arising from the failure to deliver the
financial statements for the Fiscal year ended in 2004 with an unqualified
report from the Guarantor's independent public accountant as required pursuant
to Section 5.01(a) of the Credit Agreement and (iv) amending Section 6.3(a) of
the Credit Agreement in a form reasonably satisfactory to the Purchasers.
9. Further Assurances. Each of the Guarantor and the Company agrees, at its
own expense, to execute, acknowledge, deliver and cause to be duly filed all
such further instruments and documents and take all such actions as the
Collateral Agent may from time to time reasonably request to better assure,
preserve, protect and perfect the Security Interest (as defined in the Security
Agreement) and the rights and remedies created thereby. In addition, as further
security for payment and performance of the obligations under the Note Agreement
and as consideration for the Purchaser's agreement to enter into this Waiver and
Amendment, the Guarantor and the Company hereby further agrees to grant a
perfected pledge and security interest in any additional collateral as the
Collateral Agent may reasonably request.
10. Release. For purposes of this Section, the following terms shall have
the following definitions:
(a) "Related Parties" shall mean, with respect to any released party,
such party's parents, subsidiaries, affiliates, successors, assigns,
predecessors in interest, officers, directors, employees, agents,
representatives, attorneys, financial advisors, accountants and shareholders, if
any.
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(b) "Claims" shall mean any and all claims, losses, debts,
liabilities, demands, obligations, promises, acts, omissions, agreements, costs,
expenses, damages, injuries, suits, actions, causes of action, including without
limitation, any and all rights of setoff, recoupment or counterclaim of any kind
or nature whatsoever, in law or in equity, known or unknown, suspected or
unsuspected, contingent or fixed.
Excluding only the continuing obligations of the Purchasers under the
express terms of the Note Agreement, the Transaction Documents and this Waiver
and Amendment, each of the Guarantor and the Company hereby releases, acquits
and forever discharges the Purchasers, and each of them, and their respective
Related Parties, of and from any and all Claims arising out of, related or in
any way connected with the Note Agreement, the Transaction Documents or the
transactions contemplated by any thereof, including, without limitation, any
action or failure to act, prior to the execution of this Waiver and Amendment,
in response to or otherwise in connection with the events or circumstances
arising under or otherwise related to the Note Agreement, the Transaction
Documents or any Defaults or Events of Default occurring under the Note
Agreement or the Transaction Documents.
11. Acknowledgement. Each of the Guarantor and the Company hereby confirms
and acknowledges as of the date hereof that it is validly and justly indebted to
the Purchasers for the payment of all obligations under the Note Agreement and
the Notes without offset, defense, cause of action or counterclaim of any kind
or nature whatsoever.
12. Confirmation of Note Agreement and Security Documents. Except as
amended by this Waiver and Amendment, all the provisions of the Note Agreement
remain in full force and effect from and after the date hereof, and each of the
Guarantor and the Company hereby ratifies and confirms the Note Agreement and
each of the documents executed in connection therewith. This Waiver and
Amendment shall be limited precisely as written and shall not be deemed (a) to
be a consent granted pursuant to, or a waiver or modification of, any other term
or condition of the Note Agreement or any of the instruments or agreements
referred to therein or (b) to prejudice any right or rights which the Purchasers
may now have or have in the future under or in connection with the Note
Agreement or any of the instruments or agreements referred to therein. From and
after the date hereof, all references in the Note Agreement to "this Agreement",
"hereof", "herein", or similar terms, shall refer to the Note Agreement as
amended by this Waiver and Amendment. Each of the Guarantor and the Company also
ratifies and confirms that the Security Documents remain in full force and
effect in accordance with their terms and are not impaired or affected by this
Waiver and Amendment.
13. Counterparts. This Waiver and Amendment may be signed in any number of
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument. Delivery of an executed
signature page to this Waiver and Amendment by facsimile or as an electronic
attachment to an email transmission shall be as effective as delivery of a
manually signed counterpart.
14. Governing Law. This Waiver and Amendment shall be governed by and
construed in accordance with the internal laws of the State of Illinois.
15. Time is of the Essence. Time is of the essence with respect to all
terms set forth in this Waiver and Amendment.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties have caused this Waiver and Amendment
to be duly executed as of the day and year first above written.
ONEIDA LTD.
By: /s/ XXXXX X. XXXXX
------------------
Name: Xxxxx X. Xxxxx
Title: Chief Financial Officer
THC SYSTEMS, INC.
By: /s/ XXXXX X. XXXXX
------------------
Name: Xxxxx X. Xxxxx
Title: Chief Financial Officer
ALLSTATE INSURANCE COMPANY
By: /s/ XXXXXXX X. XXXXXXX
----------------------
Name: Xxxxxxx X. Xxxxxxx
Title:
By: /s/ XXXXX X. XXXXXXX
--------------------
Name: Xxxxx X. Xxxxxxx
Title:
Authorized Signatories
ALLSTATE LIFE INSURANCE COMPANY
By: /s/ XXXXXXX X. XXXXXXX
----------------------
Name: Xxxxxxx X. Xxxxxxx
Title:
By: /s/ XXXXX X. XXXXXXX
--------------------
Name: Xxxxx X. Xxxxxxx
Title:
Authorized Signatories
PACIFIC LIFE INSURANCE COMPANY
By: /s/ XXXXXX XXXX
---------------
Name: Xxxxxx Xxxx
Title: Assistant Vice President
By: /s/ XXXX X. XXXXXXXXX
---------------------
Name: Xxxx X. Xxxxxxxxx
Title: Assistant Secretary
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CONSENT OF SUBSIDIARY GUARANTORS
Each of the undersigned is a party to a Subsidiary Guarantee
Agreement, a Subsidiary Subordination Agreement and one or more Security
Documents and is a Subsidiary Guarantor of the obligations of the Company under
the Note Agreement referred to in the foregoing Limited Waiver and Amendment No.
11 to 2001 Amended and Restated Note Purchase Agreement (the "Waiver and
Amendment"). Each of the undersigned Subsidiary Guarantors hereby (a) consents
to the foregoing Waiver and Amendment, (b) acknowledges that, notwithstanding
the execution and delivery of the foregoing Waiver and Amendment, the
obligations of each of the undersigned Subsidiary Guarantors are not impaired or
affected and the Subsidiary Guarantee Agreement, the Subsidiary Subordination
Agreement and Security Documents continue in full force and effect, and (c)
ratifies and affirms the terms and provisions of the Subsidiary Guarantee
Agreement, the Subsidiary Subordination Agreement and Security Documents. All
capitalized terms used herein which are not otherwise defined shall have the
meanings given to those terms in the Note Agreement.
Each of the undersigned hereby agree, at its own expense, to execute,
acknowledge, deliver and cause to be duly filed all such further instruments and
documents and take all such actions as the Collateral Agent may from time to
time reasonably request to better assure, preserve, protect and perfect the
Security Interest (as defined in the Security Agreement) and the rights and
remedies created thereby. In addition, as further security for payment and
performance of the obligations under the Subsidiary Guarantee Agreement and as
consideration for the Purchasers' agreement to enter into the Waiver and
Amendment, each of the undersigned hereby further agrees to grant a perfected
pledge and security interest in any additional collateral as the Collateral
Agent may reasonably request.
Excluding only the continuing obligations of the Purchasers under the
express terms of the Note Agreement, the Transaction Documents and Waiver and
Amendment, the undersigned hereby releases, acquits and forever discharges the
Purchasers, and each of them, and their respective Related Parties (as defined
below) of and from any and all Claims (as defined below) arising out of, related
or in any way connected with the Note Agreement, the Transaction Documents or
the transactions contemplated by any thereof, including, without limitation, any
action or failure to act, prior to the execution of the Waiver and Amendment, in
response to or otherwise in connection with the events or circumstances arising
under or otherwise related to the Note Agreement, the Transaction Documents or
any Defaults or Events of Default occurring under the Note Agreement or the
Transaction Documents.
"Related Parties" shall mean, with respect to any released party, such
party's parents, subsidiaries, affiliates, successors, assigns, predecessors in
interest, officers, directors, employees, agents, representatives, attorneys,
accountants and shareholders, if any.
"Claims" shall mean any and all claims, losses, debts, liabilities,
demands, obligations, promises, acts, omissions, agreements, costs, expenses,
damages, injuries, suits, actions, causes of action, including without
limitation, any and all rights of setoff, recoupment or counterclaim of any kind
or nature whatsoever, in law or in equity, known or unknown, suspected or
unsuspected, contingent or fixed.
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IN WITNESS WHEREOF, each of the undersigned has executed and delivered
this Consent of Subsidiary Guarantors as of the 29th day of April, 2004.
BUFFALO CHINA, INC. DELCO INTERNATIONAL LTD.
By: /s/ XXXXX X. XXXXX By: /s/ XXXXX X. XXXXX
----------------------- -----------------------
Name: Xxxxx X. Xxxxx Name: Xxxxx X. Xxxxx
Title: Chief Financial Officer Title: Chief Financial Officer
ENCORE PROMOTIONS, INC. SAKURA, INC.
By: /s/ XXXXX X. XXXXX By: /s/ XXXXX X. XXXXX
----------------------- -----------------------
Name: Xxxxx X. Xxxxx Name: Xxxxx X. Xxxxx
Title: Chief Financial Officer Title: Chief Financial Officer
THC SYSTEMS INC. KENWOOD SILVER COMPANY, INC.
By: /s/ XXXXX X. XXXXX By: /s/ XXXXX X. XXXXX
----------------------- -----------------------
Name: Xxxxx X. Xxxxx Name: Xxxxx X. Xxxxx
Title: Chief Financial Officer Title: Chief Financial Officer
ONEIDA SILVERSMITHS INC. ONEIDA FOOD SERVICE, INC.
By: /s/ XXXXX X. XXXXX By: /s/ XXXXX X. XXXXX
----------------------- -----------------------
Name: Xxxxx X. Xxxxx Name: Xxxxx X. Xxxxx
Title: Chief Financial Officer Title: Chief Financial Officer
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